"Few were spared in last week's federal budget, with Treasurer Hockey taking a stick to government spending, particularly health, education and welfare, while at the same time lifting taxes," he said.

"The concern is that consumers will respond to last week's budget by closing their wallets and reining in spending."

Mr Kennedy said the fact that 59 per cent of respondents to the Westpac survey were worried about the budget's impact on family finances in the next 12 months was a major concern.

"Last week's budget will be particularly binding on the household balance sheet," he said.

The Westpac survey's result reflects that of the ANZ-Roy Morgan index, which showed consumer confidence had dropped 14 per cent since April when leaks about spending cuts and the debt levy started to appear.

The ANZ survey, released on Tuesday, was conducted on the weekend after the May 13 budget.

HSBC chief economist Paul Bloxham said higher taxes and welfare cuts were hurting confidence but it was unclear how long the slump will last.

"The medium-term impact of the budget also depends on the reaction from businesses," he said.

"A continued pick-up in hiring could help to support consumer sentiment and limit the impact on consumer spending."

Consumer sentiment traditionally takes a tumble after federal governments hand down their budgets.

After the 2013 budget, the Westpac survey showed 45.6 per cent of respondents said the budget would worsen family finances.

"The initial response to a budget can sometimes be an overreaction. For example, in 2013 the index bounced back by 4.7 per cent in June," Mr Evans said.

On the positive side, there was a slight rise in the number of respondents who believed now was a good time to buy a household item.